Sharp targets smartphone displays following Foxconn takeover

News: Foxconn founder and CEO Terry Gou plans to invest in Sharp to help develop the next-generation display technology.

Japanese electronics maker Sharp is planning to accelerate the company’s smartphone displays segment under the control of Taiwan’s Foxconn Technology Group.

Last week, Foxconn agreed to acquire Sharp after years of negotiations.

Foxconn will pay JPY389bn ($3.43bn) for a 66% stake in Sharp, which is headquartered in Abeno-ku, Osaka. The purchase price is lower than the earlier offer of $6.2bn.

Foxconn founder and CEO Terry Gou said he wanted to expand the business of Sharp, which designs and manufactures electronic products such as televisions and washing machines.

Gou was quoted by the Wall Street Journal as saying, "I am committed to make speedy investments in Sharp to help develop the next-generation display technology."

The success will however depend on panel business as new technologies compete to be industry standard. The access to sharper, thinner and energy-efficient screens will play a key role for smartphone manufacturers.

The existing models utilise liquid-crystal displays, but screen suppliers are making a shift to organic light-emitting diode (OLED), screens, which enables manufacturers to follow flexible designs such as the curved screens on several Samsung Galaxy phones.

Apple is expected to start using OLED screens for its iPhones as soon as next year. The company did not confirm the plans.

Beijing-based research company Sigma Intell reports that Samsung currently makes over 95% of the global supply.

South Korea’s LG Display also manufactures the displays, and Sharp’s main rival at home, Japan Display, plans to commence mass-production of the newer panels in 2018.

Foxconn, known formally as Hon Hai Precision Industry, is planning to use ¥200bn ($1.8bn) of the cash it is committing for the Sharp deal for the development of OLED screens with an intention to deliver them by 2019.

The Taiwanese firm has for several years considered a move to expand into displays as it plans to extend further from contract manufacturing.

It will take a little longer for Sharp to get up to speed for OLED displays, as more than half the company’s OLED team has left due to job cuts and management turmoil.

Yasuo Nakane, an analyst at Mizuho Securities, is quoted in the WSJ report as saying that "Even if everything goes well, a realistic timeline for Foxconn-Sharp to start supplying OLED displays would be 2020."